Weekly Digest
Weekly Digest Issue No. 523
08-07-2010
by Deirdre McArdle
From bust to boom at Irish firms | E-reader market quite the page-turner
Job cut fears at Eircom, Vodafone
The worry of large scale job cuts came to the fore this week when a report in the Sunday Independent suggested that Eircom was planning to cull 2,000 jobs. Since then, Paul Donovan, CEO at the telco, has said that no definite figure has been put forward for job cuts but that Eircom has held talks with trade unions on a new three-year business plan that will lead to an unspecified number of redundancies and a possible change in work practices. Following these discussions, the Communications Workers Union said it planned to appoint independent financial advisers to examine the proposed three-year plan.
The plan comes as Eircom tries to cut spending as it struggles to deal with its large debt. In June, bond markets named Eircom the fifth-riskiest company in the world in terms of its chances of defaulting or restructuring its debt. Five weeks ago, its credit rating was downgraded by Moody's.
Over the past two years Eircom has managed to cut about EUR130 million from its cost base through redundancies and other savings. It is currently nearing the end of a voluntary redundancy plan that will see 1,200 workers leave the business. This is expected to be completed by September, some six months ahead of target. The newly speculated figure of 2,000 redundancies would be in addition to job cuts that have already taken place.
Elsewhere, it emerged on Wednesday that potential job cuts could be on the cards at Vodafone Ireland. The speculation follows the resolution of a pay claim brought to the Labour Relations Commission by the Communications Workers Union. The LRC recommended that Vodafone pay the 20 percent of its staff who are on collective contracts a 2 percent pay increase from 1 January 2011 and again from 1 January 2012. In exchange for the pay increase, the CWU must agree to engage with the company on a "change agenda", which will involve a review of the way the company works. This review is at an early stage.
From bust to boom at Irish firms
There was some more bad news among Irish firms this week, the most drastic being the potential closing of B3 Solutions, a cable manufacturing company based in Longford. The company, which manufactures and supplies copper-based cable for Eircom and other customers, employs 104 people at its plant in Aghafad. A receiver was appointed to the business a week ago and put it up for sale as a going concern; however, on Thursday he confirmed that no offer has been made to buy the company, and it looks like B3 will be put into liquidation within the next 24 hours.
Elsewhere, it was reported this week that Truvo USA, the holding company of Truvo Ireland, formerly Golden Pages Ltd, has filed for US bankruptcy protection, with a plan to turn the company over to its senior lenders, including AIB. Truvo Ireland publishes and distributes the telephone directory for Eircom as part of a seven-year contract that expires in 2013. It also runs an online directory at Truvo.ie. The firm said the recession had accelerated a shift among advertisers away from Truvo's printed directories in Belgium, Ireland and Portugal to the internet. It's unclear as yet how Truvo USA's move will affect the Irish business.
There was also some good news this week. University of Ulster spin-out Sophia Search closed what it claimed is the largest ever angel investment in a Northern Ireland company. Though the company did not say exactly how much it raised, it is believed to be a "seven-figure sum in US dollars". Sophia Search has developed a set of search tools that can be used to find documents within organisations. Iona Technologies co-founder Chris Horn is one of the individuals who took part in the funding round, and he has also been appointed chairman of the company.
Meanwhile, Irish technology services company IT Alliance announced its plans to invest EUR1 million in a significant British expansion. The company, whose headquarters are in Dublin, generated revenues of about EUR20 million in 2009 and is aiming to become a EUR100 million revenue company in the next five years, with much of that growth expected to come from Britain. It employs 250 people in Ireland and 150 in Britain. Delivery director Dara Mullen said the company hopes to increase the number of staff employed in Britain and Ireland.
iPhone 4 antenna issue bugs users
The antenna issue with the iPhone 4 continued to make headlines this week. Apple's own technical support team has confirmed to a number of online news sites that an upcoming software patch, which Apple said would solve the reception problem, will not actually solve the problem. Earlier this week Apple said in a statement on its website that the reception problem was the result of a software bug. It explained that: "Users observing a drop of several bars when they grip their iPhone in a certain way are most likely in an area with very weak signal strength, but they don't know it because we are erroneously displaying four or five bars. Their big drop in bars is because their high bars were never real in the first place." It assured users that the upcoming patch would fix the software bug that caused the incorrect signal strength to be displayed.
On Wednesday, online tech news sites Gizmodo and V3.co.uk reported that when they contacted AppleCare, Apple's tech support team, they were referred to the original advice of either holding the handset in a different way so as not to obstruct the lower left-hand corner where the antenna is, or buying one of the bumper cases, which cost around USD30. AppleCare told the news sites that the software patch would not actually solve the reception issue.
In response, Gizmodo, Apple's favourite tech news site, has started an online petition asking Apple to give out free bumper cases to affected users. It's fair to say that consumers haven't been impressed by Apple's handling of the issue, and in particular Steve Jobs' initial advice, when he told users: "just don't hold it that way". In saying that, the device in general has been praised by reviewers who have welcomed functions such as multitasking and the Retina display. And, despite the problem with the antenna and network reception, over 1.7 million units were sold in the three days after launch. Whether the 'grip of death' issue will have an impact on future sales remains to be seen, although it seems unlikely.
E-reader market quite the page-turner
The price war in the e-reader market continued this week with e-tailing giant Amazon cutting the price of its high-end Kindle DX by over 20 percent to USD357. The Kindle DX is Amazon's largest e-reader and was designed specifically for professional and academic environments. This latest move follows significant price cuts at the end of June by both Amazon and Barnes & Noble; the base model of the Kindle now sells for USD189 while Barnes & Noble's Nook comes in at USD199.
Also this week Sony made its price-cutting move, slashing USD50 off its high-end 'Daily Edition' e-reader, which now costs USD299. Sony also dropped the price of its entry-level device to USD149, down from USD169. The price cuts come in response to the launch of Apple's iPad, a multi-functional device that can be used as an e-reader. Devices like the Kindle and the Nook function solely as e-readers, so in order to attract more consumers Amazon et al have been forced to differentiate themselves on price. These latest price cuts have widened the gap between their e-readers and the iPad, which starts at USD499.
Of course, it's not just the iPad that's causing this price war. The e-reader market itself has become more crowded over the past year or so. The latest launch came this week when troubled book seller Borders unveiled its e-bookstore on Tuesday. Borders recently launched two e-readers: the Kobo and the Libre Pro. With the debut of its e-bookstore, Borders has bullishly predicted that it will capture 17 percent of the market by this time next year. Just last week Barnes & Noble claimed it had snapped up 20 percent of the market in the six months since its launch; Amazon is the leader in the e-book market, although it's been fairly quiet on its market share and Kindle sales.
Separately, Amazon on Wednesday made a somewhat unexpected move by announcing it was to start selling groceries in the UK via its website. As if competing in the increasingly competitive e-reader market weren't enough, the e-tailer has jumped straight into what is arguably the most cut-throat market of all.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 